While $80 oil seemed in the clouds just a year ago, it now looks primed for capture although questions are now being asked as to how oil dependent nations like Nigeria will spend this sudden windfall.
Traders in London say technical indicators show that the price Saudi Arabia is said to be aiming for may be within reach, with global benchmark Brent crude already above $74 a barrel Friday, the second day price has stayed at this level in four years.
All this is really good news for oil dependent countries like Nigeria that has seen its foreign reserves spike to above $47bn.
That level even if below the peak of above $60bn has no doubt brought stability to the local currency while improving prospects of economic growth in Africa’s largest economy.
Oil’s bullish run and rising production is already stirring a debate around how best Nigeria should spend the sudden windfall from oil export.
Reports say while futures in London have broken past the 50 percent Fibonacci retracement of the slump from when they were above $100 in mid-2014, another signal shows the rally could persist to the line just under $82.
Recent corrections in Brent have shown prices hit a speed bump only when the reading on its Relative Strength Index climbs to 75, well past the usual overbought signal of 70. With that measure now at about 68, it points to continued support for crude on its way up.
Apart from the technical indicators, investors will also be watching tumbling U.S. petroleum stockpiles, which now stand below their five-year average for the first time since 2014, and record American production.
Geopolitical tensions continue to simmer, meanwhile, with U.S. President Donald Trump due to make adecision that could lead to sanctions being reimposed on OPEC member Iran.
